Lower U.S. corn yield and higher world wheat stocks provided surprises from USDA in their January reports Friday. So the corn market bears got it wrong, but the trade also knew there is a recent history of January surprises from USDA.
“We didn’t prepare for this surprise and this is almost 5 out of the last 5 years January has had a big reaction to it,” said Bob Utterback with Utterback Marketing Services. “The expectation going in was that we were going to see corn carryover increase because of increased yields. In fact the corn yield was actually reduced and that was just below 159 and everybody was expecting it to go to 162, up a bushel and a half. We lost what everybody thought we were going to gain.”
Trade estimates had US ending stocks averaging 1.855 billion bushels but the USDA actual figure is 1.631. World ending stocks were estimated at 163.08 million metric tons and USDA’s actual figure is 160.2. Average yield estimates were calling for 161.17 bushels per acre, with USDA putting the figure at 158.80.
On the flip side of the corn market was a very bearish reaction for wheat, and Utterback says that’s a concern right now for corn producers.
“The technical nature of the wheat market now is becoming extremely negative and if wheat cannot stabilize within the next 2 or 3 days, this wheat bearishness is going to drift over into corn. Now wheat will be competitive like adding to corn supplies. So the loss in corn is being neutralized by the gain in wheat, which long term tells us the only way we can really take off in the corn market to the levels we want is the weather. But it’s not as bad as it was before the actual report.”
USDA put the actual figure for U.S. wheat ending stocks for 2013/14 at 608 million bushels, above the trade estimates of 563. World ending stocks were estimated at 182.68 million metric tons and the actual USDA figure was higher by almost 3 million metric tons, at 185.40.
For soybeans the average trade idea for U.S. 2013/14 ending stocks was 153 million bushels but USDA put the actual figure at 150 million bushels. Estimates for yield were averaging 43.26 bushels per acre and USDA came close with its 43.3. World ending stocks estimates were 71.46 million metric tons but the actual figure was pegged at 72.33.
More numbers and analysis are in the Arlan Suderman daily comments from Friday.